Lecture - 5 3.

1 The Relationship Between Organizations and Information Systems

This describes how organizations and information systems work together, or sometimes against each other. The idea of course is to keep them in sync, but that's not always possible. We'll look at the nature of organizations and how they relate to Information Systems.

This figure shows the complexity of the relationship between organizations and information technology. Installing a new system or changing the old one involves much more than simply plunking down new terminals on everyone's desk. The greatest influence, as the text points out, could simply be sheer luck!

What Is an Organization?
An organization is very similar to the Information System described in Chapter 1. Remember the figure from Chapter 1? Compare it to the figure from Chapter 3.

These figures have many things in common. Both require inputs and some sort of processing, both have outputs, and both then depend on feedback for successful completion of the loop. Information Systems use data as their main ingredient. Organizations rely on people. However, the similarities are remarkable. They are both a structured method of turning raw products (data/people) into useful entities (information/producers). Think of some of the organizations you've been involved in. Didn't each of them have a structure, even if it wasn't readily apparent? Perhaps the organization seemed chaotic or didn't seem to have any real purpose. Maybe that was due to poor input, broken-down processing, or unclear output. It could very well be that feedback was ignored or missing altogether. Often times an organization's technical definition, the way it's supposed to work, is quite different from the behavioral definition, the way it ireally works. For instance, even though Sally is technically assigned to the Production Department with Sam as her supervisor on paper, she really works for Tom in Engineering. When a company is developing a new information system, it's important to keep both the technical and behavioral definitions in perspective and build the system accordingly.

3.2 Salient Features of Organizations

This section gives you a perspective on how organizations are constructed and compares their common and uncommon features.

Why Organizations Are So Much Alike: Common Features

The class you're enrolled is an organization of sorts, isn't it? Think about it. Look at the table describing the characteristics of an organization:

TABLE 3.1

When you hear the term bureaucracy, you immediately think of government agencies. Not so; bureaucracies exist in many private and public companies. Bureaucracies are simply very formal organizations with strict divisions of labor and very structured ways of accomplishing tasks. They are usually thought of in a negative way, but they can be positive.

Standard Operating Procedures

How many of these characteristics fit your college class? How many fit any organization you're in? Some of the Standard Operating Procedures (SOPs), politics, and culture are so ingrained in organizations that they actually hinder the success of the group. Think about your experiences in groups. You had a leader (hierarchy), a set of rules by which you operated (explicit rules and procedures), and people appointed to perform certain tasks (clear division of labor). You probably voted on different issues (impartial judgments), and you decided on the best person to fill various positions within the group (technical qualifications for positions). Hopefully, the organization was able to fulfill its goals (maximum organizational efficiency), whether winning a softball game or putting on an award-winning play. If your organization wasn't successful, perhaps it was because of the SOPs, the politics, or the culture. The point is, every group of people is an organization. The interesting question you could ask yourself would be "How would the world look and function without some kind of organization?"

Organizational Politics
Everyone has their own opinion about how things should get done. People have competing points of view. What might be good for Accounting may not be to the advantage of Human Resources. The Production Department may have a different agenda for certain tasks than the Shipping Department. Especially when it comes to the allocation of important resources in an organization, competition heats up between people

and departments. The internal competition can have a positive or negative influence on the organization, depending on how it's handled by management. The fact remains that politics exist in every organization and should be taken into account when it comes to the structure of the information system.

Organizational Culture
Just as countries or groups of people have their own habits, methods, norms, and values, so too do businesses. It's not unusual for companies to experience clashes between the culture and desired changes brought about by new technologies. Many companies are facing such challenges as they move toward a totally different way of working, thanks to the Internet.

Why Organizations Are So Different: Unique Features

Would you consider the same organizational structure for a softball team as you would for a theatre production group? While there would be some similarities, the two groups would probably have some major differences. An automobile dealership would have some similarities to a department store (both sell products) and yet they would have major structural differences. We talked about virtual organizations in Chapter 1. Organizations that enter into collaborative partnerships tend to seek out companies with similar structures. It is much easier for the employees to work together if they aren't required to learn a whole different work structure on top of learning new tasks.

Different Organizational Types

Organizational Description Type

Enterpreneural structure Young, small firm in a fast-changing enviroment. It has a simple structure and is managed by an enterpreneur serving as its single chef executive officer. Large bureaucracy existing in a slowly changing enviroment, produsing standard products. It is dominated by a centralized management team and centralized decision making. Combination of multiple machine bureaucracies, each producing a different product or service, all topped by one central headquarters. Knowlege-based organization where goods and

Example
Small start-up business

Machine bureaucracy

Midsized manufacturing firm.

Divisionalized bureaucracy Professional

Fortune 500 firms, such as General Motors. Law firms, school

bureaucracy

Adhocracy

services depend on the expertise and knowlege of professionals. Dominated by department heads with weak centralized authority. "Task force" organization that must respond to rapidly changing environments. Consists of large groups of specialists organized into shortlived multidisciplinary teams and a weak central management.

systems, hospitals.

Consulting firms such as the Rand Corporation

TABLE 3.2

This table shows some common organizational structures. Think about your own experiences, in your workplace or your daily life, and try to list some organizations that fit into each category. They're all around you. Remember, just as organizations affect you in many different ways, so too do you affect the organizations.

Organizations and Environments

Some organizations are able to respond faster and better than others. Look back 10 years: The minivan didn't exist. But because of changing consumer requirements and tastes, the minivan is now one of the most popular and best selling vehicles on the road. If the organizations called automobile manufacturers hadn't responded to the changing environment, they wouldn't have been able to capitalize on new car sales. Notice that Chrysler responded faster than the others and gained tremendous market share in the meantime. Its organization is almost as big as those of Ford and GM. Yet those two weren't able to respond as rapidly to environmental changes and hence lost potential sales. Organizations differ because their ultimate goals differ. Some organizations are small by nature or small by design. Using the same thought process as you did for recognizing the different structures in organizations around you, think about the differences in those organizations. Why are they different: size, goals, environmental factors that restrict their growth? For instance, contrast a real estate company with an insurance company. The real estate company is constantly looking for new customers (buyers and sellers) and new products (houses or commercial properties) to sell. It may choose to stay small or to go with a nationwide conglomerate. The environmental factors that are likely to influence it are the state of the national economy or the nature of the local economy. Many external factors are out of its control. The employees of the company must respond quickly to potential customers or they simply won't make any money. This type of organization must be creative in the way it generates business and in the systems it uses.

On the other hand, the insurance company has relatively stable customers. People sign up with the insurer and pay their premiums on a regular basis. While customers may come and go, turnover is fairly low. Because most state governments require people to carry insurance, the company and its agents have a stable stream of income from premiums. While the parent company may suffer large losses from a sudden influx of customer claims, the small agency is not as heavily influenced by environmental factors. It doesn't have to devise ingenious ways of using or generating data, and its systems needs are very ordinary. Both businesses are small and entrepreneurial. But they must respond to employees, customers, and potential customers in very different ways. Each has different business processes it must use to meet the goal of staying in business.

Other Differences among Organizations

The external forces on an organization are tremendous. You're living in a time when these forces are causing many organizations-public, private, and governmental-to reevaluate and alter their organizations because of the Internet. Some organizations are responding faster and easier than others. Why? Much of the cause can be attributed to the structure of the organization. If the structure and culture of the organization promotes new ideas, new products, and new methods, the organization can deal with environmental changes faster than a more staid organizational structure. Some companies are simply so big that they can't change their structure as fast as technology demands.

Business Processes
What would happen if you walked into work one day to find the management telling employees they could do anything, anything at all, they wanted to do that day. If Jimmy from Production decided he wanted to work in Sales and Marketing, he could. If Sally, who normally works in Accounting, wanted to spend the day in Shipping, she could do that too. No one would have to follow any rules, or any set procedures. They could accomplish the work any way they chose. Mary decides she doesn't want to use FedEx to ship out products that day even though the company has a contract that saves lots of money. She decides to use an alternate shipping service which will cost the company more and slow down the shipment significantly. She doesn't see a need to tell Accounting about the change. Jimmy decides not to use the same old packing materials when he's preparing glass bowls for movement across the country. He determines that it is faster if he just plops the bowls into a box, closes the lid, and sends it down the line. Unfortunately, his co-worker Tim (who doesn't know anything about Jimmy's decision) is responsible for answering customer complaints.

Bill in Accounting decides that he needs a pay raise to help pay for his upcoming vacation. Normally he would be required to get his supervisor's approval to change any pay record, but since there aren't any established procedures he can just go ahead and enter the new salary data in the system. While he's at it, he gives ten of his best friends pay raises also. While Bill's friends may like the idea, the rest of the employees in the company are pretty upset. You can imagine from this scenario how quickly chaos would reign without established business processes. Processes that deliver the best product for the lowest cost in the most efficient manner are imperative to success. The way a business organizes its workflows, the methods it uses to accomplish tasks, and the way it coordinates its activities among employees, customers, and suppliers determines its business processes. Organizations, from the smallest one- or two-person group to the largest you can imagine, must have orderly processes that all divisions can understand. No part of the organization can work in isolation from any other part. Some processes may have contributed to the organization's success and now outgrown their usefulness. Information Systems can help an organization recognize processes that need to be changed. An Information System could be used to automate some of those processes or determine that they are no longer needed. And a successful organization will use an Information System to determine which processes are working well. The key to using Information Systems to analyze, change, automate, or delete processes is that the organization must determine the appropriateness of the recommendations. In other words, if the system says a process should be changed but it truly doesn't make sense to change it, then don't make the change. The system supplies recommendations; humans still have the ultimate decision-making responsibility.

Levels of Analysis
As we found out in Chapter 2, every organization has many separate functions and different levels of management. It wouldn't make good sense for an executive to use a Transaction Processing System to determine whether the company should merge with another. The Production Manager wouldn't want the external data contained in a Decision Support System to help her count the number of candy bars produced. As you move up the management levels of an organization, the span of consideration widens to include not just a single entity, but multiple departments or divisions. The Information System must respond to this widening circle of interest and supply increased information useful to the level of management using it. Bottom Line: Each organization shares common characteristics. On the other hand, each organization has unique characteristics that should be taken into account when incorporating technology. Let the organization drive the system, not the other way around.